Datadog’s Financial Results
Datadog’s business grew substantially in 2020, while profits remain limited due to ongoing investment in growth.
- Revenue. In 2020, the company reported $603.5 million, an increase of 66% compared to 2019.
- More Seven Figure Customers. The Datadog sales team is also finding success with larger customers. The company now has ninety-seven business customers paying $1 million or more per year in annual recurring revenue, up from fifty a year ago. “We have about 14,200 customers, up from about 10,500 last year,” commented Olivier Pomel, co-founder and chief executive officer of Datadog, in an earnings conference call.
- Profitability Remains Limited. Despite the company’s growing revenues, profitability remains a challenge for the business. The company reported an operating income of $63.6 million. “While we have been profitable throughout 2020 and plan to be in 2021, we are not focused on optimizing near-term profitability,” David Obstler, chief financial officer, said to investors.
- Sales and Marketing. Datadog’s business is continuing to spend heavily on sales and marketing. "Sales and marketing expense was $52.5 million or 30% of revenues compared to 35% in the year-ago period," Obstler told analysts on February 11, 2021, during the conference call.
Datadog's customer list includes major technology companies like Samsung (stock ticker KRX: 005930) and Nokia (stock ticker HEL: NOKIA), entertainment brands like 21st Century Fox and Dreamworks, and retailers like GameStop and Whole Foods.
Datadog’s Two Acquisitions
Datadog has acquired two startup companies: Sqreen and Timber Technologies. Before the acquisition, Sqreen had raised $18 million in funding.
Sqreen offers an application security management platform used by customers such as Le Mondo, Lenovo, Skyscanner, and the WWF.
Timber Technologies, which developed Vector, had raised $5.8 million in funding from investors. The business has 18 employees, mainly in New York, according to LinkedIn.
Pandemic Fuels Business Growth
As businesses increase their adoption of new technology to support remote work, technology companies win. Datadog directly attributes some of its 2020 growth to the pandemic.
“In the quarter, we saw seven-figure ARR increases from COVID beneficiaries such as a consumer device company, a large e-commerce platform and a global video games company. Perhaps more surprisingly though we also had several notable upsells from companies that were negatively impacted by the pandemic including a seven-figure upsell to a travel technology company and six-figure upsells to two separate airlines as well as a physical events company,” Pomel told investors.
Datadog Announces 2021 Forecast
Datadog plans to grow substantially in 2021. The business plans to earn $825 million and $835 million in revenue. On a non-GAAP basis, the company aimed for $35 to $45 million in operating revenue. At this pace, the company might achieve $1 billion in revenue by 2022.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book, "Project Managers At Work," shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.